Power Grids in
Asia
mode of operation and
dynamics
Stephen Wilson
ECONOMIC CONSULTING ASSOCIATES LIMITED
41 Lonsdale Road London NW6 6RA UK
tel +44 20 7604 4545 / fax +44 20 7604 4547
www.eca-uk.com
Presentation at a workshop on
Power Grids and CDM Methodologies
Buenos Aires, 8 December 2004
1 (C) 2002. Economic Consulting
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Outline

Key issues and questions

Four example countries

Implications for CDM
projects seeking to avoid
electricity generation
emissions in Asia
2 (C) 2004. Economic Consulting
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Drawing on the Baseline Recommendations paper
of Kartha, Lazarus and Bosi, Energy Policy 32,
2004:
Key
issues

Build, operating or combined margin:
defining the marginal plant



Baseline dynamics and crediting lifetimes



now
in the future
will new construction change the marginal plant?
will this occur within the next 7 or 10 years?
Geographic aggregation, are plants dispatched




by individual state/province only (sub-national)?
by multi-state/province regions (wider sub-national)?
across a national grid?
with international imports and exports?
3 (C) 2004. Economic Consulting
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Key
questio
ns


Supply-demand balance

Is there adequate generation or a shortage?

If a shortage, is this met by off-grid generation?
What is the current generation plant mix?


What is the current generation fuel mix?



% of coal, gas-fired, hydro, nuclear, other
What is the current dispatch method?


% of coal, gas-fired, hydro, nuclear, other
bid-based, economic least-cost or other
Dynamics

What is the rate of growth and additions?

Will the additional plant change dispatch?
How sensititive are future emissions to:

additional plant?

the dispatch method?
4 (C) 2004. Economic Consulting
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Example Asian countries
Country
Installed capacity
GW
Growth
Doubling % pa
China
2nd largest
~ 380
7y
10%
India
=6th (with Germany) ~ 112
11y
6%
Thailand
Mid-sized
~ 25
10y
7%
Vietnam
Small
~10
8y
9%
China
India
Vietnam
Thailand
5 (C) 2004. Economic Consulting
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China



Huge system 300+ GW in
2002, ~380 GW in 2004
2nd largest in the world
High developing country
growth rates
especially in the
coastal south and east
35
47
4
20

Large income and
development disparities
between coastal and
interior provinces
25
63
41
<1
10
53
12
Year 2002 values in GW
6 (C) 2004. Economic Consulting
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2
China



Huge system 300+ GW in
2002, ~380 GW in 2004
Northeast
2nd largest in the world
High developing country
growth rates
especially in the
coastal south and east
North
Xinjiang


Large income and
development disparities
between coastal and
interior provinces
Tibet
Regional grids,
with weak interconnections
between provinces and
largely non-existent
interconnections between
grids
7 (C) 2004. Economic Consulting
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Northwest
Central
Shandong
South
Hainan
East
Fuijian
China



West-to-East power
transmission project
in 10th Five-year Plan
North
channel
3 major power
transmission
‘channels’
Major 500kV AC and
some DC
investments
Central
channel
South
channel
The 3 ‘channels’ plus north-south
interconnections will eventually form the national grid
8 (C) 2004. Economic Consulting
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China


Still predominantly state-owned, but trend is
towards privatisation
State-power generation assets divested into
5 gencos

two large grid companies formed

regional grids being tied together




western resources (gas and hydro) being
developed and ‘forced’ in to eastern
provinces
dispatch still involves ‘sharing’
generation shortage in some areas (eg:
Guangdong)
CDM unlikely to change hydro dispatch, gas
will be must-run, so the ‘marginal’ plant is
likely to be coal for the foreseeable future
9 (C) 2004. Economic Consulting
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Context: generation ownership
in China’s electricity sector
Foreign privately controlled
~ 300 GW
Chinese privately controlled
SPC Involvement
SPC minority-owned
~ 150 GW
SPC controlled
SPC wholly-owned
0 GW
0%
25%
50%
75%
100%
Ownership
SPC
Non-SPC SOE
Non-SOE Chinese
10 (C) 2004. Economic Consulting
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Foreign Private
Capacity
non-SPC, State-owned
China: national grid
• Generation already
separated from
transmission
• State Power’s generation
assets allocated to five
companies, transmission
assets to two companies
• State Power to be
State Power
Grid Corporation
a transco and
system operator
• The 18 200 MW Three Gorges
project will play a major role
at the heart of the China’s
future national grid
Southern Power
Grid Company
Guangdong and south China initially separate from ‘national grid’
11 (C) 2004. Economic Consulting
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China: special case of
Guangdong
100%
3
1
Plant Type
75%
3
utility captive
plants plants
50%
12
9
Centrally
dispatched
25%
Non-centrally
dispatched
1
2
0%
25%
50%
75%
Dispatch
A large proportion of on-grid capacity in
Guangdong is not centrally dispatched
12 (C) 2004. Economic Consulting
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GW
100%
Hydro
Thermal
Nuclear
India

Very large system 112 GW
31



2
Thermal dominated
17
High developing country
growth rates
32
5 regional grids,
improved and improving
interconnections and
dispatch co-ordination within
and between regions
29
Year 2002 values in GW
13 (C) 2004. Economic Consulting
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India




Mix of central and state-level ownership
Capacity is still predominantly (90%) governmentowned, but there is a trend to privatisation, some
states further down the path than others
5 regional grids, 4 regional dispatch centres
dispatch previously state-by-state by telephone
negotiation, little discipline, poor frequency
control



now much more co-ordinated, new availabilitybased generation tariff, Power Trading
Corporation managing trades between excess
and shortage states and catalysing new projects
still generation shortages in some areas
interconnections being improved, moving
towards integrated national power market

gas MAY play an increasingly large role

marginal plant will be thermal, but gas or coal?
14 (C) 2004. Economic Consulting
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Thailand




Mid-size system ~25 GW
Thermal dominated, with
a majority of gas
High developing country
growth rates
National grid, with some
constraints
15 (C) 2004. Economic Consulting
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Thailand





Mix of state-ownership (EGAT still has 60%)
and private
One large base-load coal plant (~10%), but
capacity (70%) and energy (~60%) is
dominated by gas-fired combined cycle plant
In dispatch EGAT decrements its plants to
meet IPP contractual commitments
Base load coal and hydro will always be
dispatched
It is safe to say that any CDM project would
be avoiding gas-fired CCGT emissions
16 (C) 2004. Economic Consulting
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Vietnam

Small system ~10 GW

Hydro-thermal balanced



Significant undeveloped
hydro resources and gas
Very high developing
country
growth rates
National grid, with two
major load centres at each
end of the country
17 (C) 2004. Economic Consulting
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Vietnam




Majority state-owned (EVN) but private IPPs
coming in (eg: Phu My gas-fired CCGT)
Hydro-thermal system, with gas-fired CCGT
to dominate the thermal side
EVN are also planning a nuclear plant
Assuming that gas-fired IPPs will be mustrun, coal could be the marginal plant, but
likely to need simulation to determine role of
hydro
18 (C) 2004. Economic Consulting
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Economics: China
Coal
Gas
500
600
US$/kW
83
100
US$/kW/y
Unitised
1.12
1.33
USc/kWh
Fuel cost
2.28
4.17
USc/kWh
Total
3.40
5.50
USc/kWh
+O&M
+O&M
CapEx
Annualised
Cost of capital 10% over 10y (ie: 15% RoE if 70% debt @8%)
85% plant load factor
Coal @$65/tce, coal -> elec sent out 35%
Gas @$5.50/mmBtu, gas -> elec sent out 50%
19 (C) 2004. Economic Consulting
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Economics: India
Coal
Gas
CapEx
850
600
US$/kW
Annualised
142
100
US$/kW/y
Unitised
1.90
1.34
USc/kWh
Fuel cost
2.10
2.31
USc/kWh
Total
4.00
3.65
USc/kWh
+O&M
+O&M
Cost of capital 10% over 10y (ie: 15% RoE if 70% debt @8%)
85% plant load factor
Coal @$60/tce (~$2/GJ), coal -> elec sent out 35%
Gas @$3/mmBtu (subsidised), gas -> elec sent out 50%
20 (C) 2004. Economic Consulting
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Economics: India (2)
Coal
Gas
CapEx
850
600
US$/kW
Annualised
142
100
US$/kW/y
Unitised
1.90
1.34
USc/kWh
Fuel cost
2.10
3.80
USc/kWh
Total
4.00
5.14
USc/kWh
+O&M
+O&M
Cost of capital 10% over 10y (ie: 15% RoE if 70% debt @8%)
85% plant load factor
Coal @$60/tce (~$2/GJ), coal -> elec sent out 35%
Gas @$3/mmBtu (subsidised), gas -> elec sent out 50%
21 (C) 2004. Economic Consulting
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Carbon economics
China
India
India
Gas
5.50
3.65
5.14
Coal
3.40
4.00
4.00
Cost 
2.10
-0.35
1.14
USc/kWh
Emission 
0.45
0.45
0.45
kg/kWh
Unit cost
~47
-8
25
22 (C) 2004. Economic Consulting
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US$/t CO2
Dynami
cs

Transmission projects can significantly change
plant dispatch where they inter-connect




Power trading between previously connected
but poorly co-oprdinated grids can significantly
change plant dispatch


states or provinces to sub-national regional grids
(examples: China, India)
sub-national grids to a national grid
(examples: China, India)
countries into international regional grids
(examples: India with Nepal and Bhutan,
Thailand and Vietnam with Laos)
example: India
A move from traditional to market-based
models has the potential to change plant
dispatch significantly

partial example: power trading in India
23 (C) 2004. Economic Consulting
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Dynamics
Changes in: Geographic
aggregation
Dispatch
method
Plant mix
Marginal
plant
Country
China
Yes
Tentatively
Somewhat
Probably not
India
Rapidly
Yes
Yes
Quite likely
Thailand
[Imports]
Maybe
Yes
No
Vietnam
[Imports]
Not likely
Somewhat
Possibly
24 (C) 2004. Economic Consulting
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Conclusi
on

China:


India:


Theoretically large potential market but with
several dynamic changes, CDM projects are
likely to be avoiding gas-fired CCGT emissions
Thailand:


Huge potential market and CDM projects could
avoid coal emissions, but geographic aggregation
and market developments may affect this
CDM projects will be avoiding gas-fired CCGT
emissions, therefore will need to be relatively low
incremental c/kWh projects
Vietnam:

A relatively small market, but rapidly growing.
Stable plant mix and non-imminent market
reforms suggest minimal dynamic changes
25 (C) 2004. Economic Consulting
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Key
question
s

What price does the CDM project need
to sell the electricity at to get
dispatched?



What does this imply about the plant being
displaced in the dispatch schedule?
What does this imply about the plant being
deferred as a result of the CDM project?
Will market reforms change this picture within
the crediting life of CDM projects?
26 (C) 2004. Economic Consulting
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Contact
[email protected]
27 (C) 2004. Economic Consulting
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